New York Attorney General Sues Crypto Firms Over Alleged $1 Billion Pyramid Scheme

Attorney General Letitia James of New York has brought legal action against two cryptocurrency companies, NovaTech and AWS Mining, alleging that they ran a $1 billion pyramid scam that tricked hundreds of thousands of people, eleven thousand of whom were residents of New York.

Prayer groups, social media, and WhatsApp discussions are said to have been utilized by NovaTech and AWS Mining between 2019 and 2023 to entice investors with promises of large profits. Nevertheless, an examination showed that just $26 million of the $1 billion raised was truly utilized for exchanging digital assets on NovaTech’s cryptocurrency exchange.

“Thousands of New Yorkers were falsely promised better lives if they simply trusted NovaTech and AWS Mining with their money, but it was all a lie,” stated Attorney General Letitia James. “These cryptocurrency companies targeted immigrant and religious communities with promises of financial freedom but instead stole their money and drained their life savings. We are seeing the real dangers of unregulated cryptocurrency platforms with schemes like these, but New Yorkers can rest assured that we will use the tools at our disposal to crack down on crypto fraudsters.”

Collapse of AWS Mining and NovaTech

AWS Mining, which had assured investors of high returns through crypto mining, collapsed in 2019 after it failed to generate sufficient funds to repay customers. NovaTech, on the other hand, continued making weekly payments to disguise its insolvency until its eventual collapse in 2023, leaving users unable to withdraw their funds.

The lawsuit by AG James aims to ban both firms and their founders from engaging in any business related to securities or commodities in New York. It also seeks disgorgement and damages for the affected investors.

This lawsuit underscores the real dangers of unregulated cryptocurrency platforms and highlights the importance of vigilance and regulation in the crypto space. The New York Attorney General’s office is committed to using all available tools to combat and eliminate crypto fraudsters to protect consumers.